The 5 Hidden Risks of Relying on a Shōsha Partner
Japan’s trading houses can open doors — but that access comes with trade-offs. Here’s how foreign companies can keep control over the market-entry process and avoid costly mistakes.
There’s a type of company in Japan that’s hard to explain — and often completely misunderstood.
They trade everything from factory equipment to frozen shrimp. They quietly initiate and invest in billion-dollar projects. And they sit at the center of Japan’s business ecosystem, connecting suppliers, manufacturers, retailers, and global markets.
From oil to semiconductors, from industrial plants to convenience store shelves — they move it all.
The companies I’m talking about are the sōgō shōsha — often translated as “general trading companies.” But the word trading doesn’t even begin to capture what they actually do.
A partnership with a shōsha can open doors — but it’s not always the grand prize it appears to be.
In case you’ve ever visited their headquarters in Tokyo — the ones with the windows overlooking the Imperial Palace — you might have been impressed by the view and their global appearance. But shiny offices don’t tell the full story. The real question is: do these companies actually move the needle for foreign businesses trying to break into Japan?
I’ve seen this firsthand. Having worked inside one of these firms and collaborated with others, I know what goes on behind the scenes — and what it really means to partner with a sōgō shōsha.
In my recent posts, I explored the strategic question every foreign company faces: Should you partner with a Japanese company — or go it alone? If you're still unsure which partner options are right for you, I’ve broken them down for you in this piece.
This week, we’re zeroing in on one of the most common entry routes: partnering with a shōsha, or Japanese trading company, and the five limitations you need to be aware of.
Japan’s Corporate Supernodes and the Foreign Firms Betting on Them
The top six sōgō shōsha — Mitsubishi Corporation and Mitsui & Co., Sumitomo and Itochu, Marubeni and Sojitz — are Japan’s industrial powerhouses. Often joined by Toyota Tsusho, they occupy the top of the business pyramid, and with their political connections often play crucial roles in Japan’s most strategic industrial projects.
If you manage to secure a tie-up or investment from a sōgō shōsha, they can be kingmakers for foreign companies entering the Japanese market. But it’s essential to understand the limits of what they can do for you — and adjust your expectations accordingly.
Over the past 20 years, I’ve been on both sides of this relationship. I’ve worked inside one of the major sōgō shōsha, and I’ve supported global startups and SMEs trying to crack Japan by partnering with them.
And here’s what I’ve seen again and again:
A Western company lands a shōsha partnership. There are handshakes, optimism, maybe even a press release...
On paper, it looks like a perfect match.
You get instant access to Japan’s business elite, a team that knows the market, and the credibility that comes with a top-tier trading firm.
What could go wrong?
The overseas executives think:
“We found our partner — now Japan will take care of itself.”
And it is true: Shōsha can be excellent partners. But too often, foreign companies treat them as a turnkey solution… and then wonder why things go quiet six months later.
At first there is excitement. But months later, frustration sets in. Progress is unclear. Responses are vague. Meetings go in circles.
Why?
Because partnering with a shōsha isn’t a shortcut. It’s a collaboration that demands your ongoing attention and effort. Without clear priorities, strong onboarding, and regular engagement, even the most prestigious partnership can stall or fade into quiet inertia.
But before we break down what can go wrong, let’s take a look at the role of the shōsha in Japan’s trade relations.
What Role Do Shōsha Really Play?
To understand how to navigate relations with Japanese trading firms, you need to understand what shōsha actually do — and what they don’t.
If there’s one thing all shōsha have in common, it’s this: deep networks. Whether it’s inside Japan’s keiretsu groups or in overseas markets, these firms are built on relationships — often spanning decades and passed down through generations of executives.
At the top are the sōgō shōsha — Japan’s general trading giants. These are the likes of Mitsui and Sumitomo, Mitsubishi or Itochu. While once focused on commodity and machinery trading, today they function more like holding and investment companies. The lower-margin, transactional trading work has mostly been outsourced to specialized subsidiaries. What remains at the core is a strategic engine: allocating capital, managing global assets, and developing long-term projects — from offshore wind farms and copper mines to mobility platforms and agri-tech ventures.
Then there are specialized shōsha — firms focused on specific sectors like machinery, medical devices, textiles, or food ingredients. These can be large players like Mitsubishi Shokuhin in food distribution, or smaller trading companies serving narrow verticals.
At the end of the spectrum are small boutique trading houses, often owner-led and sometimes family-run. These firms don’t carry brand-name weight, but they often maintain trusted relationships in niche markets where larger players aren’t active.
The common thread?
They can unlock doors that foreign firms often can’t open on their own.
But there’s a flip side — and this is where foreign companies run into trouble.
Understanding the Limits of the Shōsha Model
Shōsha are often seen as strategic connectors to the Japanese market, opening doors to customers, capital, and credibility. They excel at managing risk, brokering complex deals, and acting as trusted intermediaries between Japan Inc. and the outside world.
I’ve sat through countless meetings with shōsha executives over the years. And if there’s one thing I’ve learned, it’s this: their primary loyalty is to their Japanese clients.
They’ll introduce your product with professionalism and make the right connections. But their first instinct is to listen — carefully and quietly — to the end-customer.
Don’t expect them to translate your intent precisely or defend your position. Their role isn’t to push your agenda, but to preserve harmony with long-standing domestic partners.
And when priorities clash — as they inevitably do — they’ll almost always side with those existing relationships. You matter, but you're rarely their top priority.
And that’s just the start. Shōsha aren’t built like Western sales teams. Their representatives typically don’t carry sales quotas or earn commissions. Instead, they act more like relationship brokers or tech scouts — opening doors, but rarely pushing deals forward on their own.
They also don’t rely on CRM systems, sales pipelines, or marketing automation. A former colleague of mine called it the “Shōwa style” — a reference to the old-school way of doing business in Japan’s postwar era: meeting face to face, putting the relationship first, and reporting results to the boss.
Yes, they’ll use video conferencing — especially for internal coordination — but that doesn’t mean they operate with the speed or structure you might expect.
So don’t count on your shōsha partner to act like a turnkey sales engine. If you do, you’ll likely end up frustrated.
What can go wrong? In the next section, we’ll break down the five key risks that trap many foreign companies — and how you can stay in control and avoid them.
Risk #1: Relying on Them for Active Account Management
Shōsha representatives aren’t trained like Western salespeople. Their attention often is scattered across different products and clients. They manage broad portfolios, not focused sales pipelines. If your solution doesn’t quickly generate demand, it’ll likely get pushed aside.
Don’t expect structured outreach, pipeline tracking, or regular follow-ups — unless you create that process and drive it yourself.
How to manage it: Define joint sales activities, set regular check-in rhythms (like biweekly), and agree on reporting expectations from the start.
Risk #2: Binding Yourself Exclusively Too Early
Many shōsha will ask for exclusivity, and it might feel like a clear pledge to move your product — but it can quickly become a bottleneck.
I’ve seen trading companies request exclusivity to fend off competitors and lock in control over a product. Once they secure exclusive rights, their urgency often fades unless deals start flowing fast. If progress stalls, you’re stuck with one partner while other opportunities stay off-limits.
How to manage it: Tie exclusivity to clear performance milestones, schedule regular progress reviews, and include opt-out clauses to keep your options open.
Risk #3: Underestimating How Much You Need to Train Them
Shōsha counterparts are great at building relationships — but they usually aren’t prepared to sell complex or technical products on their own. Since they are your primary interface to the market, you need to invest in training and support.
Without thorough onboarding and ongoing guidance, the shōsha sales rep who’s in charge of your product will have trouble to explain your value proposition to the end-customer. What’s obvious to you won’t always come through to skeptical buyers — and your product risks ending up just another listing in a catalog.
How to manage it: Provide detailed technical training, join early sales meetings, and co-sell with your shōsha counterpart to help them master your pitch.
Risk #4: Losing Customer Visibility
Once the shōsha takes over customer interactions, you lose clear insight into what’s really happening on the ground.
You won’t hear the true objections, early doubts, or subtle signals from the customer side. Sometimes, you won’t even know which stakeholder (at the shōsha or end-customer’s level) is blocking progress or if your representative is really following through — until the project quietly dies.
How to manage it: Stay involved in key meetings. Insist on shared debriefs in case you can’t attend. Keep direct communication with end-users whenever possible.
Risk #5: Letting Them Drive the Strategy
Your shōsha counterpart may connect you with the right players — but they won’t define your market approach.
Shōsha act as relationship brokers, not go-to-market strategists. You need to stay in the driver’s seat — don’t solely rely on them to set the direction. Otherwise, you risk scattered efforts and slow progress.
How to manage it: Do your homework and develop your go-to-market strategy upfront. Define your target customers and positioning. Then embed the shōsha in your plan, develop key messages together — through workshops, shared documents, or regular check-ins — and calibrate your approach on a consistent basis.
The Shōsha Partnership Reality Check
In my experience over two decades working with Japanese trading companies, partnering with a shōsha often seems like the easy ticket into Japan’s complex market.
But clients have experienced firsthand that the reality is more nuanced. Trading companies are valuable connectors, not your dedicated sales team. Their focus naturally leans toward their long-standing Japanese clients, and their systems aren’t designed for actively selling foreign products. Without your clear direction and ongoing involvement, your partnership risks becoming just another quiet, slow-moving item on their agenda.
Success in Japan means recognizing that working with a shōsha is never a “set it and forget it” scenario.
It requires continuous effort — thorough training, clear goals, and a sales message tailored to the local market. Leave everything to them, and momentum will stall as your partner gradually stops pushing your product.
Simply signing a contract with a shōsha doesn’t mean the job is done. It’s only the beginning. Stay engaged, provide support, and don’t hesitate to challenge your partner to keep things moving forward.
If you need a hand managing your shōsha partner or a fresh perspective on how to unblock sluggish growth in Japan, reach out. I’m just one call away.
Talk soon.
Pascal Gudorf
— Helping you unlock your full potential in Japan
Such a compact article, but so useful!
Additionally, it is even easy to understand (great effort has been put into a text about a complex matter, which is easy to read). I will share these points - thank you!